CEI President Urges DOT to Reduce Regulation of Online Travel Services

Today the Department of Transportation (DOT) is holding a public hearing regarding the latest review of its restrictions on computer reservations systems (CRSs). These rules reduced the profitabilty and survivability of the airline industry, slowed the evolution of e-commerce, and established a frightening precedent by restricting commercial speech in the electronic world.  Fred Smith, president of the Competitive Enterprise Institute in Washington, D.C., will testify at the hearing that the proposed rules should be withdrawn, and the current CRS regulations be allowed to expire on January 31, 2004.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />


“When the federal government freed the airlines from decades of regulation in the early 1980s, it retained restrictions on their evolving electronic marketing tools, the electronic supermarket shelves on which airline services are now marketed. E-marketing was commercial free speech—a highly protected activity—but that point was never realized by DOT then, and it is still not realized today,” says Smith. “These restrictions crippled the abilty of the airline industry to diversify into other sectors of the travel industry and reduced what might have been a profitable lead role for airlines in the e-commerce world. It's time for these regulations to be withdrawn, to let markets evolve to better serve consumers through competitive regulation.”


CEI has long been active in the area of government regulation of CRSs.  It was first involved in regulation of airline ticket marketing in 1985, and has submitted comments and testified on this topic numerous times in the years since. Last year, a paper on this topic authored by a CEI Senior Fellow looked at the assault on Orbitz, the newest firm threatened by these rules.


Today's hearing is being held at the Marriott at <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Metro Center at 775 12th Street, N.W., in Washington, D.C. Mr. Smith will testify in the afternoon session. His comments will posted on CEI's website after the hearing, and Mr. Smith is also available for interviews through the media relations department at CEI at 202.331.2252.



CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.